Case Digest: SCHMITZ TRANSPORT & BROKERAGE CORPORATION v. TRANSPORT VENTURE, INC., INDUSTRIAL INSURANCE COMPANY, LTD., et al.

SCHMITZ TRANSPORT & BROKERAGE CORPORATION v. TRANSPORT VENTURE, INC., INDUSTRIAL INSURANCE COMPANY, LTD., et al.

456 SCRA 557 (2005)

A common carrier shall exercise extraordinary diligence to prevent and/or minize the loss or destruction of goods.

SYTCO Pte Ltd. Singapore shipped from the port of Ilyichevsk, Russia on board M/V ―Alexander Saveliev‖ (a vessel of Russian registry and owned by respondent Black Sea) 545 hot rolled steel sheets. The vessel arrived at the port of Manila and the Philippine Ports Authority (PPA) assigned it a place of berth at the outside breakwater at the Manila South Harbor. Petitioner Schmitz Transport, engaged to secure the requisite clearances, to receive the cargoes from the shipside, and to deliver them to Little Giant Steelpipe Corporation‘s warehouse at Cainta, Rizal. It likewise engaged the services of respondent Transport Venture Inc. (TVI) to send a barge and tugboat at shipside.

The tugboat, after positioning the barge alongside the vessel, left and returned to the port terminal. Later on, arrastre operator commenced to unload 37 of the 545 coils from the vessel unto the barge. By noon the next day, during which the weather condition had become inclement due to an approaching storm, the unloading unto the barge of the 37 coils was accomplished. However, there was no tugboat that pulled the barge back to the pier. Eventually, because of the strong waves, the crew of the barge abandoned it and transferred to the vessel. The barge capsized, washing the 37 coils into the sea. Earnest efforts on the part of both the consignee Little Giant and Industrial Insurance to recover the lost cargoes proved futile.

Industrial Insurance later filed a complaint against Schmitz Transport, TVI and Black Sea through its representative Inchcape (the defendants) before the RTC of Manila, for the recovery of the amount it paid to Little Giant plus adjustment fees, attorney‘s fees, and litigation expenses. Industrial Insurance won and the Schmitz et al.’s motion for reconsideration is denied.

In effect, Schmitz now filed charges against TVI et al. It asserts that in chartering the barge and tugboat of TVI, it was acting for its principal, consignee Little Giant, hence, the transportation contract was by and between Little Giant and TVI. The Court rendered a decision holding Schmitz and TVI liable.

ISSUES:

Whether or not the liability for the loss may attach to Black Sea, Schmitz and TVI

HELD:

TVI‘s failure to promptly provide a tugboat did not only increase the risk that might have been reasonably anticipated during the shipside operation, but was the proximate cause of the loss. A man of ordinary prudence would not leave a heavily loaded barge floating for a considerable number of hours, at such a precarious time, and in the open sea, knowing that the barge does not have any power of its own and is totally defenseless from the ravages of the sea. That it was nighttime and, therefore, the members of the crew of a tugboat would be charging overtime pay did not excuse TVI from calling for one such tugboat.

As for Schmitz, for it to be relieved of liability, it should, following Article 1739 of the Civil Code, prove that it exercised due diligence to prevent or minimize the loss, before, during and after the occurrence of the storm in order that it may be exempted from liability for the loss of the goods.

While Schmitz sent checkers and a supervisor on board the vessel to counter-check the operations of TVI, it failed to take all available and reasonable precautions to avoid the loss. After noting that TVI failed to arrange for the prompt towage of the barge despite the deteriorating sea conditions, it should have summoned the same or another tugboat to extend help, but it did not.

The Court holds then that Schmitz and TVI are solidarily liable for the loss of the cargoes. As for Black Sea, its duty as a common carrier extended only from the time the goods were surrendered or unconditionally placed in its possession and received for transportation until they were delivered actually or constructively to consignee Little Giant

Parties to a contract of carriage may, however, agree upon a definition of delivery that extends the services rendered by the carrier. In the case at bar, Bill of Lading No. 2 covering the shipment provides that delivery be made ―to the port of discharge or so near thereto as she may safely get, always afloat.‖ The delivery of the goods to the consignee was not from ―pier to pier‖ but from the shipside of ―M/V Alexander Saveliev‖ and into barges, for which reason the consignee contracted the services of petitioner. Since Black Sea had constructively delivered the cargoes to Little Giant, through Schmitz, it had discharged its duty.

In fine, no liability may thus attach to Black Sea.